‘It’s a big thing when a machine goes down’: Ben Findlay, CEO, Machine Compare
Image credit: Nick Smith
“Anybody who has worked in engineering or manufacturing has seen it. It’s everywhere and everyone knows about it. It’s an open secret.” The CEO of Machine Compare is talking about what he describes as, “the mountains of over-ordered or obsolete mechanical component stock just lying around in stores. It is one of the manufacturing industry’s worst challenges, as well as being among its most wasteful.”
Having seen the problem first-hand during his two-decade stint in the paper industry, Ben Findlay wanted to explore how to recirculate surplus and unseen industrial spare parts in a sustainable way that could be monetised via an e-commerce platform. “The scale of the challenge is vast. Doesn’t matter if you measure it in pounds, euros or dollars. It’s billions.” More specifically, “we know that any mid-sized manufacturing site – regardless of sector – is usually carrying around €250,000 worth of spare parts that they can’t use and are still in the original box. There’s this culture in engineering that ‘stock is good’. But it’s a waste too. We also know that they scrap around €100,000 of these per year, per site, to make space for new parts coming in. Our job is to try to make sure that surplus parts don’t end up as landfill and recirculate them. There’s a use for them. They’re parts, and parts are useful.”
While “industry has done a good job focusing on making products sustainable”, says Findlay, surplus components arise from obsolescence due to organisations updating their industrial process lines and supply chains, “as well as, to a degree, by the way in which parts are accounted for on company balance sheets. Because surplus components often don’t show up in the accounting procedure, it’s as if they don’t exist, so there’s no need to address the problem.” By selling surplus spares to third parties, Findlay contends, losses can be recovered, with millions returned to the original purchaser as a revenue stream.
While a proportion of these industrial spare parts will inevitably need to be written off, there’s enough “good stuff out there in warehouses worldwide to develop a market”. Findlay describes how “we talk to companies in the oil and gas sector who pump millions into development ideas, fill warehouses with new parts, get to the viability phase and then when the project doesn’t pass viability, in the old days they’d scrap everything. And so, they’d end up with hundreds, probably thousands, of warehouses just full of mothballed parts for a project that never got off the ground. To them it’s just a depreciating asset or an expense. But they can’t do that now because they have an issue with sustainability.
“An example I often use is bearings,” says Findlay. “They don’t go out of date and can be used in different machines.” Overstocking is often due to what Findlay describes as the positive force of the engineer’s Boy Scout mentality: “It’s a big thing because if a machine goes down, that’s when the pressure is on. Those machines make money, and the engineer’s job is to keep them running. It’s a very brave engineer that doesn’t take the full consignment of stock that the manufacturer is offering. The truth is that the stock builds up through no individual’s particular fault. It’s just a culture of always ‘be prepared’. Make sure you’ve got enough stock of spare parts so that the machine can’t go down.”
The problem used to be that there wasn’t enough data to tell you what was needed, says Findlay. It’s only in the past five years that the advent of enterprise resource planning (ERP) systems has “brought in a greater data-led approach. Add to this supply chain issues and increased costs,” and the time has never been better to literally take stock of how much money you have lying around in unused component form.
Findlay maintains that while today’s products are probably about as sustainable as they can be, “we need to look at the granular detail of how we can make processes better. Machine Compare wanted to change the way the industrial world trades spare parts, and the way we do that is we inform choice and inspire action, bringing to the market a new way to do this.” This ‘new way’ integrates aspects of front-end digital e-commerce platforms and marketplaces such as Amazon and eBay.
“If you look at the current trends,” says Findlay, “you can see that there’s a need right now. There’s a need for the parts on a consumer level, but also, on the data side, if any of these organisations are trying to attain their net-zero objectives, they’re not going to do that without clean data internally.” Clean data is critical to making the cycle work because “if we are going to fulfil our objective – which is to sell parts – we need that data, while the companies out there holding this stock need it to make sense of what they have”.
While Findlay’s business card may state that he is CEO of Machine Compare, he sees the idea of corporate hierarchy as something that belongs to the last century. When Findlay and his late brother started the company, “we gave ourselves titles like ‘dragon slayer’. We just weren’t into that status side of things. Besides, as you work your way up an organisation, it’s not really about the job. It’s about the scale of the problems you have to solve. So, by the time you get to CEO level, your job title really should be ‘complex problem solver’, because that’s all you’re doing. Nothing more. But I suppose that’s a big enough challenge, isn’t it?” The challenge became one of how to identify the wealth of industrial spare parts that lay hidden and find a way of bringing them to market.
The problem Findlay was to end up addressing became apparent to him while spending “17 years as a specialist working with machines that turn paper into cardboard”. He describes how he worked with major European multinationals who “when they bought a new machine would bring me in to deal with the old one. These machines were three storeys high and 127 metres long and there weren’t too many people in the world that did what I used to do.”
These decommissioning projects usually lasted three months, “and the result was always the same: 36 containers and two flat racks all gone out of the door along with my asset register and list of spare parts. Someone’s just paid 10 million quid for that machine and so they want every nut and bolt that goes with it. Also, the site doesn’t want anything left behind because they don’t own it and they can’t do anything with it.
“It’s obvious if the capital equipment has left the building, but with spare parts it’s different. We’d spend half a day in the stores with a list generated by the ERP system going through the shelves finding all the parts on the list. But you’d also find parts that weren’t on any list, and because over time you get to know the machines, you get an idea of what you should expect to find. And we’d see stuff that just shouldn’t be there. Overstock, obsolete parts and so on”.
This was a decade ago, a time when Findlay could sense the winds of change in the large-scale cardboard-box-making market in which consolidation of corporations was reducing the number of projects competing for space in his diary. “I needed to come up with a new idea. Initially I thought about a price comparison website for industrial spare parts.” Crucially, Findlay’s brother came to the business armed not only with an MBA from Durham but with expertise in e-commerce gained at travelsupermartket.com, “which was where we got the original idea for Machine Compare. We wanted to test to see if the market would take to this idea, which it did. But there was competition, and the idea wasn’t really scalable.”
For Findlay, scalability of any industrial spare parts offering was always going to be the key to success. With this in mind, he set up a meeting with one of his biggest former clients and presented his idea: “We think that you have a lot of unused parts in your group that you don’t have any use for, and we think there’s an opportunity for us to sell them.” The client’s reaction was that while Findlay’s assumption might well be correct, there wasn’t enough research on the subject to tell if the idea was viable. “We were told that the parts were worthless. They were scrap. At that point ESG sustainability hadn’t really kicked in, or if it had, it was about the product and not necessarily the process. But the group’s head office ended up saying that if we did the work on this, they’d give us an order. In other words: go away, don’t expect anything, good luck.”
Findlay then contacted 365 of their organisations globally and spoke with their engineering managers, “who updated their SAP systems and identified potentially €100m worth of spare parts within the group”. This was the moment, says Findlay, when he knew that his e-commerce industrial spare parts platform company could operate at scale. There was one caveat: he needed data.
“One aspect on the data side we’ve been really hot on is traceability,” says Findlay, anticipating what he thinks is going to be one of the main concerns for any procurement manager sourcing stock out of other organisations’ warehouses via an e-commerce platform. For him this is inextricably linked with the Right to Repair movement that centres on campaigning for legislation that would give consumers more freedom to repair or modify products that they have bought. With pressure on manufacturers to remove obstacles to repair, the idea is that consumer goods stay in the market for longer while removing the environmental impact of lack of repairability. “That will happen in industry too,” says Findlay. “It will happen because continual turnover of capital equipment is not only expensive but has a huge impact on supply chain issues.”
Which means that there will be a trend towards repairing industrial process machinery rather than labelling it ‘legacy’ or ‘heritage’ before writing it off. Added to this, “due to current market pressures, many original machine manufacturers simply won’t exist in five years’ time, so tracking traceability of their spares will become key in situations where you’re going to be looking for components for XYZ manufacturer’s machine. You’re going to need the data on these parts. This data will also help in sector-specific stock finding its way out of that sector. What often ends up as scrap are mechanical parts for specific machines. Say there are only 50 of those machines worldwide, then the market appears limited, and the supplier of the machine should consider buying back the parts and recirculating them. But if we can find the spare parts that are not specific to that machine, then we’re not just trying to sell to 50 owners: we can sell to everybody.
“Our message is simple: there’s all this surplus stuff. Instead of throwing it in the bin, sell it. The basis of what we do is sustainability. We don’t touch the goods – they stay where they are. And part of the reason for that is that some of it will be scrap and we don’t want to move scrap around. It’s a complete waste of time.” To sell mechanical components, “you need a platform, and you need data. But where we differ from Amazon or eBay is first that we are B2B, and second our vision is to be the place to be for anything around machinery, industry, MRO... that’s where we sit. People come to us, and they can find spare parts sitting in other people’s stores. But in future we are hoping to deliver an offering where they can also find suppliers of new items, sources of information, databases of people leading to intrinsic benefits such as recruitment.”
What we’re not talking about, says Findlay, is a listings site where customers click on pictures of second-hand cars. “It’s more like the metaverse in the Zuckerberg sense of it being a hub where all industry can be, that encourages best practice and that can help people to make sustainable choices. In creating this place, we’re trying to do a good thing. My brother died while we were developing Machine Compare together, and I want to be able to say to his kids as well as my own that we did something about over-consumption.”
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